Daljeet Singh Kohli, head of research at local brokerage IndiaNivesh, said investors in India are in a buying mood as "they believe the government will continue with its efforts for economic reforms."

The Indian government has announced several pro-business steps since mid-September, including allowing more foreign investment in the retail, aviation and broadcast sectors. It has also promised to take more measures to boost the economy.

Mr. Kohli said the July-September corporate results have been on expected lines until now. Though there are issues of higher bad assets and restructured loans with banks, profitability in the sector is still strong, leading investors to look for bargains, he added.

Shares of ICICI Bank rose 2.1% to end at 1,079.20 rupees, while those of Union Bank of India surged 8.1% to 223.25 rupees.

In the engineering and infrastructure sector, Larsen & Toubro gained 2.7% to close at 1,674.90 rupees, while Bharat Heavy Electricals rose 1.1% to 229.15 rupees.

Automobile shares continued their rise after Thursday's sharp gains on hopes that vehicle sales will pick up further pace ahead of the Diwali festival this month. India's top car and sport-utility-vehicle makers Thursday posted strong sales for October, with customers drawn by new models and special offers for the ongoing festival season.

Airline shares were up on hopes that foreign investors will buy stakes in Indian carriers. Thursday, budget carrier SpiceJet said it was in initial talks with Hong Kong-based Bravia Capital and other investors to raise funds via a share sale.

SpiceJet ended 0.6% up at 34.60 rupees Friday, while Jet Airways rose 3.1% to close at 361.45 rupees. Kingfisher Airlines gained 5.0%, the daily limit set for the stock, to 13.89 rupees.

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